GM sues FCA over alleged corruption
American General Motors (GM) is suing Italian-American Fiat Chrysler Automobiles (FCA) over the alleged bribing of United Auto Workers (UAW) union’s officials. FCA stays confident but wonders if GM isn’t trying to block the merger with French PSA.
American carmaker General Motors has filed a lawsuit on Wednesday against its rival Fiat Chrysler Automobiles (FCA). GM says that the Italian-American carmaker benefited from unfair advantages after bribing officials of the United Auto Workers (UAW) union.
GM says it was forced to pay billions of dollars in higher wages compared to its Detroit competitor. GM is also just coming out of a 40-day UAW strike.
The UAW union, which represents the workers of the US auto industry, has already been under investigation since 2007 over corruption. Four former officials and three FCA employees have pleaded guilty to operating a long-running bribery scheme. Due to the investigation, Alphons Iacobelli, former FCA executive, is serving a prison sentence.
That being said, GM thinks that the apple is rotten to the top. The US carmaker names Sergio Marchionne, former FCA CEO who died last year, as the scheme’s central figure.
Millions of dollars lost
FCA allegedly obtained significant concessions from the UAW during wage negotiations in 2009, 2011, and 2015. According to data from the Center for Automotive Research, the average hourly wage at GM is 63 dollars while it’s at 55 dollars at FCA, and 61 dollars at Ford.
According to GM, the aim of the scheme was to weaken General Motors to then ease, or even force, the merger that didn’t work a few years back. The lawsuit stated that some 4,5 million dollars from the FCA-UAW training funds were diverted between 2009 and 2014.
“We are astonished by this filing, both its content and its timing. We can only assume this was intended to disrupt our proposed merger with PSA as well as our negotiations with the UAW. We intend to defend against this meritless lawsuit vigorously and pursue all legal remedies in response to it,” declares an FCA spokesperson.
“GM’s claims are unfounded, and FCA will prove it at the appropriate time. I’m also saddened that false accusations are being made against a person like Sergio Marchionne,” said FCA’s chief executive, John Elkann, adding that he doesn’t believe this court case could derail the merger preparation with PSA.